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Now there's a thought to ponder. But think about it... How true is this statement? For years now the landscape in the world of transportation and logistics has changed drastically. This is especially true with small and medium sized businesses. The reason is the responsibility for management of transportation and logistics costs usually rests with the financial group. Who better to control costs! While we could not agree more with this statement, we are intrigued by the lack of knowledge in some companies when it comes to understanding freight carrier costs. If the party responsible for controlling these costs is not familiar with how the carriers' determine these rates how can they be successful in their mission to control these costs.
You would be surprised at how many companies just do not have a clue. On the other hand, you would be amazed at how successful some companies are in this area even though they are not transportation experts. What separates the have's from the have not's? Very often it's the basic skill of asking questions so the executive can educate themselves on the freight carriers costing structures. Once the corporate executive shows his knowledge to the carrier sales representatives, you would be surprised at how far they can drive costs down. It's a simple point of "Knowledge is Power".
Here are a list of questions every corporate executive in charge of controlling transportation costs should ask their carrier sales reps. And don't be bashful, ask the same question of ALL of the carriers the company does business with:
Are your base rates the same as your competition?
If not, how do they compare to your top three competitors?
Who are your top three competitors?
What is the margin of profit your company receives from our account? (NOTE: They may stutter on this one!)
How does your company determine the discount you have offered us?
What can we do as a business partner to help you reduce costs so that we can share in that savings?
As our business partner for the past ___ years, what advice would you give us to help us reduce costs?
The real challenge is to let the carrier know that you care. That you have a corporate fiduciary responsibility to make sure your company receives the most competitive rates for the services being provided. Remember we said "MOST COMPETITIVE", not the cheapest rate. There is a huge difference. The cheapest rate may wind up being the most costly rate if the shipment is lost pr damaged or if you lose a customer because of poor service. By the way, do you know what your customer's wants and needs are? You don't know what you don't know. It may be time to find out.
Anthony Nuzio is the President of ICC Logistics Services, Inc and a globally recognized expert in the transportation and logistics field. He is a former adjunct professor at Nassau College and the U.S. Merchant Marine Academy and works with a team of skilled professionals to achieve bottom-line cost savings. Visit Anthony on the web at http://www.icclogistics.com/. Click here; to learn more about Anthony.
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